Accuracy of Advertising and Notice of Insured Status
Final rule.
CFR Part: "12 CFR Part 740"
RIN Number: "RIN 3133-AE78"
Citation: "83 FR 17910"
Page Number: "17910"
"Rules and Regulations"
SUMMARY: The NCUA Board (Board) is revising provisions of the NCUA's advertising rule to provide regulatory relief to federally insured credit unions (FICUs). The advertising rule requires FICUs to use the NCUA's official advertisement statement when advertising, and it currently permits three versions of that statement. Under this final rule, the Board is allowing FICUs the option of using a fourth version: "Insured by NCUA." To provide additional regulatory relief, the Board is: Expanding a current exemption from the advertising statement requirement regarding radio and television advertisements; and eliminating the requirement to include the official advertising statement on statements of condition required to be published by law.
DATES: This final rule becomes effective
FOR FURTHER INFORMATION CONTACT:
SUPPLEMENTARY INFORMATION:
I. Background
The Federal Credit Union Act (Act) requires each FICU to display NCUA's "official sign" regarding
FOOTNOTE 1 12 U.S.C. 1785. END FOOTNOTE
FOOTNOTE 2 12 CFR part 740. END FOOTNOTE
A. Part 740 Requirements
Part 740 prohibits any FICU from using advertising /3/ or making any representation which is inaccurate or deceptive or which misrepresents its services, contracts, financial condition, or the Truth in Savings requirements. It also prescribes requirements for both the NCUA's official advertisement statement that FICUs must make when advertising and the NCUA's official sign that FICUs must display.
FOOTNOTE 3 This includes print, electronic and broadcast media, displays, signs, and stationary and other promotional material. END FOOTNOTE
Currently, there are two versions of the NCUA's official advertising statement: (1) The longer version, which reads "This credit union is federally insured by the
Section 740.5(c) of the NCUA's regulations enumerates several kinds of advertisements that, for practical reasons, are exempted from the general rule requiring the use of the official advertising statement. /4/ With respect to these exempted advertisements, the Board is focusing on the exemptions relating to radio and television advertisements of a certain duration. /5/
FOOTNOTE 4 The following advertisements need not include the official advertising statement under the current rule: (1) Credit union supplies such as stationery (except when used for circular letters), envelopes, deposit slips, checks, drafts, signature cards, account passbooks, and noninsurable certificates; (2) Signs or plates in the credit union office or attached to the building or buildings in which the offices are located; (3) Listings in directories; (4) Advertisements not setting forth the name of the insured credit union; (5) Display advertisements in credit union directories, provided the name of the credit union is listed on any page in the directory with a symbol or other descriptive matter indicating it is insured; (6) Joint or group advertisements of credit union services where the names of insured credit unions and noninsured credit unions are listed and form a part of such advertisement; (7) Advertisements by radio that are less than fifteen (15) seconds in time; (8) Advertisements by television, other than display advertisements, that are less than fifteen (15) seconds in time; (9) Advertisements that because of their type or character would be impractical to include the official advertising statement, including but not limited to, promotional items such as calendars, matchbooks, pens, pencils, and key chains; (10) Advertisements that contain a statement to the effect that the credit union is insured by the
FOOTNOTE 5 12 CFR 740.5(c)(7) and (8). END FOOTNOTE
B. Regulatory History
For many years, the NCUA's advertising and official sign regulations were essentially the same as those of the
FOOTNOTE 6 12 CFR part 328. END FOOTNOTE
FOOTNOTE 7 76 FR 30521 (
The NCUA's 2011 amendments also required FICUs to include the advertising statement on statements of condition required to be published by law, a requirement not imposed on banks.
C.
On
FOOTNOTE 8 82 FR 46173 (
II. Summary of Comments on 2017 NPRM
The NCUA received 36 comments from federal and state credit unions, trade associations, credit union leagues, credit union employees, and an individual. These commenters generally supported the proposed rule, although a few commenters opposed discreet aspects of the proposal.
In supporting the proposal, several commenters called the changes modest yet important. A few commenters emphasized that part 740's primary goal is to inform the public about share insurance.
Commenters stated that the proposed rule would: (1) Provide regulatory relief and flexibility, particularly allowing more efficient communications to members and potential members; (2) provide parity with banks regulated and insured by the
Each proposed amendment and the corresponding public comments recommending alternatives or modifications are discussed in more detail below.
III. Final Rule
A. Adding a Fourth Alternative Version of the Official Advertising Statement
As noted, part 740 currently provides three options for the NCUA's official advertising statement: (1) "This credit union is federally insured by the
Virtually all commenters supported the proposal to add an additional version of the official advertising statement. Commenters expressed appreciation for this proposed alternative, stating that it provides regulatory relief. One commenter noted that the proposed version consists of 13 characters as opposed to 22 or 71 characters. Commenters stated that the change is especially meaningful for new social media platforms because it enhances flexibility while still conveying the important message regarding federal share insurance. They further posited that providing a shorter alternative makes advertising more cost effective because print and electronic advertising prices are often based on length and duration.
One commenter recommended allowing an even shorter ten character message--"NCUA Insured" or twelve character message "Member NCUSIF." This commenter stated that this would provide parity with the
The Board agrees the proposed alternative will add flexibility without any adverse effect on potential members. However, it does not believe it necessary to adopt the suggested "NCUA Insured" or "Member NCUSIF." Therefore, the Board adopts this aspect of the proposal as proposed.
B. Expand Exemption for Radio and Television Advertisements
As noted above, the current advertising rule exempts from the requirements of part 740 radio and television advertisements that are less than 15 seconds in duration. In the 2017 NPRM, the Board proposed to expand the radio and television advertisements exemption from 15 seconds to 30 seconds. Virtually all commenters supported this aspect of the proposal. The commenters supported the Board's goal of restoring parity between FICUs and banks and noted this change would enhance a FICU's ability to communicate to members. The commenters stated that the previous reduction of the exemption in 2011 from 30 seconds to 15 seconds was unnecessary and increased regulatory burden.
The Board agrees and adopts this aspect of the proposal as proposed.
C. Eliminate Requirement Regarding Statements of Condition
The 2011 amendments, for the first time, required FICUs to include the advertising statement on statements of condition required to be published by law. In the 2017 NPRM, the Board proposed to relieve FICUs of this burden. Of the commenters who addressed this aspect of the proposal, all agreed with it. They stated that the requirement is unnecessary and that relief from it restores parity with banks.
The Board agrees with the commenters and adopts this aspect of the proposal as proposed.
D. Social Media, Mobile Banking, and Other Digital Communication
Current part 740 focuses primarily on traditional forms of advertising such as print, radio, and television. In the 2017 NPRM, the Board requested comment on whether to modify the regulations to more precisely address advertising on social media, mobile banking, text messaging, and other digital communication platforms, such as Twitter and Instagram. The Board requested specific recommendations that would balance the goal of informing the public regarding federal share insurance coverage with the practical constraints inherent in social media advertising.
Twelve commenters addressed this topic, noting that digital media typically are designed as extremely short forms of communication. Several commenters favored making no changes to part 740, stating that the proposal to permit the fourth version of the official advertising statement was sufficient to accommodate new forms of advertising. Other commenters recommended adding new exemptions to part 740 for various forms of digital advertisements provided the official advertising statement appears elsewhere in the FICU's advertisement. Others recommended modifying certain provisions of part 740 short of adding new exemptions. For example, one commenter recommended that, for text-based messaging, the regulations should allow the official advertising statement to be expressed by a hashtag for Twitter, e.g., "#NCUAInsured" or "InsNCUA." Another commenter suggested allowing the use of an emoji that would indicate insured status that could be included in tweets or text messages.
The Board has determined that, given the rapidly changing technological landscape, it is appropriate to delay taking action to amend part 740 regarding social media at this time. The Board believes that part 740 provides a sufficient framework to inform potential and current credit union members regarding federal share insurance coverage for advertisements made in traditional ways and on social media. Additionally, the
Regulatory Procedures
Regulatory Flexibility Act
The Regulatory Flexibility Act requires the NCUA to prepare an analysis to describe any significant economic impact a regulation may have on a substantial number of small entities. /9/ For purposes of this analysis, the NCUA considers small credit unions to be those having under
FOOTNOTE 9 5 U.S.C. 603(a). END FOOTNOTE
Paperwork Reduction Act
The Paperwork Reduction Act of 1995 ("PRA") applies to rulemakings in which an agency by rule creates a new paperwork burden on regulated entities or modifies an existing burden. /10/ For purposes of the PRA, a paperwork burden may take the form of either a reporting or a recordkeeping requirement, both referred to as information collections. This rule does not constitute a "collection of information" within the meaning of section 3502(3) and would not increase paperwork requirements under the PRA or regulations of the
FOOTNOTE 10 44 U.S.C. 3507(d); 5 CFR part 1320. END FOOTNOTE
Executive Order 13132
Executive Order 13132 encourages independent regulatory agencies to consider the impact of their actions on state and local interests. In adherence to fundamental federalism principles, the NCUA, an independent regulatory agency as defined in 44 U.S.C. 3502(5), voluntarily complies with the executive order. The rule will not have substantial direct effect on the states, on the connection between the national government and the states, or on the distribution of power and responsibilities among the various levels of government. The NCUA has determined that this rule does not constitute a policy with federalism implications for purposes of the executive order.
Small Business Regulatory Enforcement Fairness Act
The Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121) (SBREFA) provides generally for congressional review of agency rules. A reporting requirement is triggered in instances where the NCUA issues a final rule as defined in Section 551 of the Administrative Procedure Act. The NCUA does not believe this final rule is a "major rule" within the meaning of the relevant sections of SBREFA. As required by SBREFA, the NCUA has filed the appropriate documentation with OMB for review.
The
The NCUA has determined that this rule will not affect family well-being within the meaning of Section 654 of the
FOOTNOTE 11 Public Law 105-277, 112 Stat. 2681 (1998). END FOOTNOTE
List of Subjects in 12 CFR Part 740
Advertisements, Credit unions, Share insurance, Signs and symbols.
By the National Credit Union Administration Board on
Secretary of the Board.
For the reasons discussed above, the NCUA Board amends 12 CFR part 740 as follows:
PART 740--ACCURACY OF ADVERTISING AND NOTICE OF INSURED STATUS
1. The authority citation for part 740 continues to read as follows:
Authority: 12 U.S.C. 1766, 1781, 1785, and 1789.
2. Amend
(a) Each insured credit union must include the official advertising statement, prescribed in paragraph (b) of this section, in all of its advertisements, including on its main internet page, except as provided in paragraph (c) of this section.
(b)(1) The official advertising statement is in substance one of the following:
(i) This credit union is federally insured by the
(ii) Federally insured by NCUA;
(iii) Insured by NCUA; or
(iv) A reproduction of the official sign as described in
(2) The official advertising statement must be in a size and print that is clearly legible and may be no smaller than the smallest font size used in other portions of the advertisement intended to convey information to the consumer.
(c) * * *
(7) Advertisements by radio which do not exceed thirty (30) seconds in time;
(8) Advertisements by television, other than display advertisements, which do not exceed thirty (30) seconds in time;
* * * * *
[FR Doc. 2018-08557 Filed 4-24-18;
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